TIDMTET
RNS Number : 7005C
Treatt PLC
13 October 2022
13 October 2022
TREATT PLC
("Treatt" or "the Group")
Trading update for the year ended 30 September 2022
Treatt, the manufacturer and supplier of a diverse and
sustainable portfolio of natural extracts and ingredients for the
beverage, flavour and fragrance industries, today publishes a
trading update for the year ended 30 September 2022 ("FY22").
Highlights
-- FY22 profit before tax and exceptional items still expected
to be in line with revised Board expectations of between GBP15.0m
and GBP15.3m, announced on 15 August 2022
-- Revenue growth of c.13% (9% in constant currency) in line with market expectations
-- Progressive dividend policy unchanged
-- Correction of over-hedged FX contracts and implementation of new FX management systems
-- Majority of production now transitioned to the new UK
facility and UK production capacity will at least double once
process is fully completed (anticipated in FY23)
-- Substantial investment over recent years in production and
people to support significant growth opportunities over medium
term, bolstered by favourable consumer trends in the beverage
market
FY22 performance
Revenue for the year is anticipated to be c.GBP140m (FY21:
GBP124.3m), an increase of c.13% (c. 9% in constant currency).
Revenue growth was broad-based, across all of our categories,
except for Tea as previously communicated. This performance was
driven in particular by our Citrus, Synthetic Aroma and Health
& Wellness categories. Coffee sales, which are anticipated be
to c.GBP1m, will be reported separately for the first time in our
full year results. Tea sales declined on the back of an exceptional
FY21 performance and lower than expected demand in hard tea in the
US, which also materially impacted margins for the year.
Our Citrus category, which contributed 48% of Group revenue
(FY21: 44%), grew by over 20%, while margins were broadly in line.
During the year we implemented selected price increases to offset
higher commodity prices.
Our Health & Wellness category (including sugar reduction)
had another strong year, growing by 15% (FY21: 29%) with strong
consumer demand for 'better for you' products driving sales in our
specialist solutions, such as the reduction of calorific content in
beverages.
Despite a very strong prior year, our Fruit & Vegetables
category continued to grow by 8% (FY21: 60%) with mango, pineapple,
strawberry and kiwi leading the way.
An increase in products used to flavour alternative proteins and
savoury snack foods helped grow our Synthetic Aroma category by 14%
(FY21: 9 %).
In line with revised guidance announced in August 2022, the
Board expects to report profit before tax and exceptional items of
between GBP15.0m and GBP15.3m.
Operational developments
The Company has reviewed how it can better limit FX exposure in
light of increasing volatility. This has resulted in the correction
of previously over-hedged FX contracts and the implementation of
new FX management systems which will provide greater controls for
the Group in this area moving forwards.
The majority of production has now transitioned to the new UK
headquarters and UK production capacity will at least double once
this process is fully completed. Distillation equipment is
anticipated to move to the new site in 2023.
Cash and dividends
The Group ended the year with net debt of c.GBP23m (FY2021:
GBP9.1m). During the year the Group spent GBP6m on its new UK
facility and invested in holding prudent levels of inventory to
mitigate supply chain risks for customers.
The business continues to generate good levels of cash and the
Board confirms its intention to continue its progressive dividend
policy.
Outlook
After a challenging year, the Group enters the new financial
year with confidence in Treatt's proposition and its ability to
deliver top line growth, supported by positive market dynamics.
After substantial investment in our people and production
facilities to support the Group's next phase of expansion, we do
not anticipate any significant increase in administrative expenses
in the short to medium term, above the normal rate of
inflation.
Daemmon Reeve, CEO of Treatt, commented:
"We delivered continued positive growth in sales for the year,
reflecting a good performance across the vast majority of our
categories, however, we were impacted by some specific factors in
the second half which ultimately led to a disappointing outcome for
the full year.
We have taken a number of immediate actions in recent weeks to
ensure the business has the right systems in place, whilst also
confirming that the substantial investment in our team and
facilities is adequate to meet our ambitious goals.
Whilst the macro environment remains uncertain, we are
encouraged by prevailing consumer trends, particularly in the
beverage market, which play into our specialist expertise in
flavour. As such, we are confident the business can revert to its
trajectory of growth."
Treatt's results for the year ended 30 September 2022 are
expected to be announced on 29 November 2022.
Treatt plc +44 (0)1284 702500
Daemmon Reeve Chief Executive Officer
Ryan Govender Chief Financial Officer
Financial PR
MHP Communications +44 (0) 20 3128 8789
Tim Rowntree
Simon Hockridge
Catherine Chapman
Joint Brokers
Investec Bank Plc +44 (0)20 7597 5970
Patrick Robb
David Anderson
Peel Hunt LLP +44 (0) 20 7418 8900
George Sellar
Andrew Clark
Lalit Bose
About the Group
Treatt is a global, independent manufacturer and supplier of a
diverse and sustainable portfolio of natural extracts and
ingredients for the flavour, fragrance and multinational consumer
product industries, particularly in the beverage sector. Renowned
for its technical expertise and knowledge of ingredients, their
origins and market conditions, Treatt is recognised as a leader in
its field.
The Group employs over 400 staff in Europe, North America and
Asia and has manufacturing facilities in the UK and US. Its
international footprint enables the Group to deliver powerful and
integrated solutions for the food, beverage and fragrance
industries across the globe.
For further information about the Group, visit www.treatt.com
.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
This announcement contains forward-looking statements that are
subject to risk factors associated with, among other things, the
economic and business circumstances occurring from time to time in
the countries, sectors and markets in which the Group operates. It
is believed that the expectations reflected in these statements are
reasonable, but they may be affected by a wide range of variables
which could cause actual results to differ materially from those
currently anticipated. No assurances can be given that the
forward-looking statements in this announcement will be realised.
The forward-looking statements reflect the knowledge and
information available at the date of preparation of this
announcement and the Group undertakes no obligation to update these
forward-looking statements. Nothing in this announcement should be
construed as a profit forecast.
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